Bee Partners seeks to work with pre-seed companies to create innovative products in the deep tech domain. The fourth fund concluded with $50 million in pledges; managing partner Michael Berolzheimer stated it was oversubscribed.
The San Francisco-based venture capital firm makes investments in businesses that are primarily concerned with robotics, machine learning, artificial intelligence, and emerging technologies. Berolzheimer expects more innovation to emerge from labs than ever in deep tech. So much so that, despite a slowdown in investment for the sector, Bee Partners had a 40% year-over-year rise in transaction volume, he added. Dealroom.co reports that in the second quarter of 2023, deep tech remained the second most invested category after energy.
Given the disruption and innovation emerging from that industry, he stated, “The challenge is that a lot of deep tech companies are getting funded, just not necessarily getting the funding that we think it deserves.” Deep tech is so vast that such a remark is sweeping. Though it is a little more covert, there is still a lot of action going on.
LPs of the business include family offices in the United States and a university endowment in Boston. It is one of the few pre-seed investment firms that recently closed on fresh funds, joining the likes of Garuda Ventures and Onvi Capital.
But Berolzheimer clarified to TechCrunch that Bee Partners is not like other venture capital firms, adding that his company is one of the few that is prepared to make such substantial investments at such an early stage.
“We like to say, ‘no code, no problem, no customers, no capital,'” he stated. Even if the business isn’t yet formed, we’ll invest in a team that has a fantastic idea. Just a few days after our incorporation, we are writing that first check, and we feel safe doing so. It’s pretty unusual for a founding team to be able to take home $500,000 or $1 million at once.
The partnership arrangement of Bee Partners is another distinctive feature—hence the name. Founders at Bee get to collaborate with the entire team of partners, whereas other companies usually assign one person to each portfolio business, according to Berolzheimer.
Twenty percent of Bee Partners IV’s money has already been invested in nine businesses, three using generative AI. Nova raised $2.4 million for brand integrity protection products. This year, it also co-led a seed round at Wellplace, a platform for dental practices to purchase products. It invested in Series A fermentation technology startup Pow. Bio.
The business has committed slightly over $130 million, making this its largest fund. At $43 million, its third fund was completed in 2019. Each fund that Bee Partners invests in generally comprises 25 firms over four years. It has invested as little as $350,000 and as much as $1.5 million, with an average check size of $800,000. The business claims that over 60% of portfolio firms are matriculated into Series A.
“We chose to maintain our focus at that 25-point point,” Berolzheimer stated. “It allows us to devote more time and effort to each of our businesses, which is the main reason we founded Bee Partners in the first place: to assist entrepreneurs from the ground up. We assist them with achieving product-market fit so they may go on to Series A.
